Chalco Gains by Limit on China Market Investment: Shanghai Mover

March 21 (Bloomberg) -- Aluminum Corp. of China Ltd., the
nation’s biggest producer of the metal, surged by its daily
limit in Shanghai after reports the government will boost
investments in the stock market and regulate rare-earth output.

Aluminum Corp., known as Chalco, advanced 10 percent, the
most since Jan. 17, to close at 7.59 yuan. The company’s shares
in Hong Kong rose 1.1 percent to HK$3.83.

As much as 40 percent of Guangdong province’s 100 billion
yuan ($15.8 billion) of pension funds may be invested in stocks,
the 21st Century Business Herald reported today. The government
will increase punishment for excess production of rare earths
and also encourage the formation of large producers, China
Central Television reported yesterday, citing the Ministry of
Industry and Information Technology.

“Cyclical stocks, like Chalco, usually react quickly if
the market has increasing capital,” said Wu Kan, a Shanghai-based fund manager at Dazhong Insurance Co., which oversees $285
million. “News that the government will regulate rare-earth
mining also fuels speculation such measures will benefit large
producers.”

Chalco’s parent, Aluminum Corp. of China, took over five
rare-earth companies in the eastern province of Jiangsu in June
to boost capacity. Chalco Chief Executive Officer Xiong Weiping
plans to diversify into rare earths, coal and iron ore as profit
margins for its aluminum production shrink. The parent company
has yet to transfer the rare-earth assets to Chalco.

China, the world’s second-largest economy, has set export
limits on rare earths and minor metals, including molybdenum and
tungsten, to conserve resources and protect the environment.
Other stocks also gained after the reports.